skip to Main Content

How Much Income Do I Need to Buy a House?

putting money into jar

Homeownership is not just for the ultra wealthy. While income is an important factor when buying a house, knowing exactly how much you need to earn is not as simple.

Most people who buy a home use a mortgage loan to finance the majority of the purchase price. Lenders consider an applicant’s debt-to-income (DTI) ratio when deciding how much they are willing to loan for the purchase of a home. If you have higher debt, such as from student loans, car loans, or credit card debt, you will need to have a higher income to show that you are able to comfortably pay all of your bills. The lender compares these two amounts to make sure that you can handle adding the monthly mortgage payment.

If you aren’t sure about what to expect, talk to your lender about get preapproved or prequalified. They will ask about your basic financial situation to give you a ballpark of what you can borrow. Keep in mind that this amount is not definite and that it may go up or down as they review your application more thoroughly in underwriting.

How Do Lenders Determine My Income?

For those traditionally employed, you will need to provide your pay stubs or W-2s to show your most recent earnings. Contract employees can provide a 1099 form to show the same information. If you are self-employed, your previous few years’ tax returns will be needed to show a strong history of income. In general, self-employed and contract workers need to show a longer history of earnings because their income can fluctuate more. You can also provide documentation of income earned through commissions, bonuses and overtime, military benefits, alimony and other court-ordered payments, investments and retirement accounts, and social security.

What Else Does a Lender Consider?

Income and DTI are not the only things that a lender wants to know when considering your mortgage application. They also look at your credit score, the purchase price of the home, and the percentage that you plan to put down as a down payment.

If your income is lower than ideal for your home purchase but you have little debt and an excellent credit score, your lender might still be comfortable approving your loan. Be prepared to provide documentation of every recurring expense that may impact your ability to pay back the loan. There is no set amount of income that you need before you can purchase a home, but it is always a good idea to get your debt as low as possible before beginning your application. Talk to your lender about your individual situation and what steps you can take to become a homeowner.

Author Bio: Greg Sandler
Greg Sandler is a distinguished leader and strategist in the mortgage and real estate investment industry. With over two decades of experience, Greg has honed his expertise in guiding his clients to build wealth through real estate.

Greg Sandler has direct and first-hand experience as co-founder and CEO of USA Investment Group Management Inc., focusing on growing real estate holdings and diversified asset portfolios. Under Greg's guidance, the company has executed hundreds of traditional real estate acquisitions and currently manages a substantial portfolio of rental units.

Greg also has a track record of driving multi-million-dollar revenues and leading high-performing teams to success in mortgage loan originations, achieving the prestigious "Top 1% Originator" status in consecutive years. Currently steering the helm as the President at USALending.AI in Keller, TX, Greg has revitalized this division of a mortgage bank, significantly expanding the company's scale.

Prior to this, Greg's role as Senior Vice President at Fairway Independent Mortgage Corp in Rocklin, CA, was marked by his pivotal contribution in establishing the company's presence in northern California and northern Nevada. Under Greg's leadership, his team of nearly 110 dedicated mortgage professionals originated and funded approximately $800 million in residential mortgages annually.

Greg's professional journey is marked by his exceptional skills in negotiation, sales leadership, financial analysis, and P&L management. His ability to strategize, coupled with his in-depth knowledge of the mortgage and real estate sectors, makes him a visionary leader and a respected figure in the industry.

To book a call with Greg Sandler, please visit:

Back To Top